Vancouver – Having purchased a gold stream from First Uranium‘s (FIU-T, FUM-J) Mine Waste Solutions (MWS) project, Gold Wheaton (GLW-V) is adding another from its Ezulwini underground gold mine. The projects are respectively about 160 km and 40 km southwest of Johannesburg, South Africa.
Gold Wheaton and First Uranium have signed a definitive agreement that will see Gold Wheaton receive 7% gold of Ezulwini’s life-of-mine gold. To get it Gold Wheaton will make an up front payment of US$50 million and then buy Ezulwini’s gold for US$400 per oz. or the spot price of gold if it dips below that mark.
Four years down the road the US$400 price will increase by 1% to, in part, account for inflation. The pricing terms match those agreed to in Dec. 2008 over a gold stream from First Uranium’s MWS project that has Gold Wheaton buying 25% of life-of-mine gold. Gold Wheaton paid US$125 million to secure the right to that gold stream.
The Ezulwini agreement guarantees Gold Wheaton 16,500 oz. gold in 2010 and 19,600 oz. gold in 2011. Thereafter Gold Wheaton expects to buy about 26,000 oz. gold a year. During the second quarter, 2009, Gold Wheaton bought 6,954 oz. gold from First Uranium’s MWS project.
As outlined in a 2009 scoping study First Uranium expects the Ezulwini mine to produce about 352,000 oz. gold and 1.1 million lbs. U308 a year over a 17-year mine life at a cash cost of US$418 per oz. gold.
The study was based on an indicated resource of 14 million tonnes grading 6.14 grams gold per tonne of which 4.4 million tonnes graded 5.36 grams gold and 0.074% U308. The project has a substantially larger inferred resource.
In addition to announcing the new gold stream with First Uranium, Gold Wheaton, which has about 1.4 billion outstanding shares, announced a 10:1 share consolidation, subject to a special shareholders meeting.
Beyond its First Uranium gold streams Gold Wheaton also has a gold streaming agreement with FNX Mining (FNX-T, FNXMF-O).
On news of the gold purchase Gold Wheaton’s shareprice gained 1¢ to 29¢. First Uranium’s shareprice gained 3¢ to $2.78. First Uranium has around 166.8 million shares outstanding.
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